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Did Hedge Funds Make The Right Call On Portland General Electric Company (POR) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Portland General Electric Company (NYSE:POR) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Is Portland General Electric Company (NYSE:POR) a buy right now? Investors who are in the know were turning less bullish. The number of long hedge fund positions retreated by 4 recently. Our calculations also showed that POR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now let’s take a glance at the fresh hedge fund action encompassing Portland General Electric Company (NYSE:POR).

How have hedgies been trading Portland General Electric Company (NYSE:POR)?

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the fourth quarter of 2019. By comparison, 19 hedge funds held shares or bullish call options in POR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is POR A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the biggest position in Portland General Electric Company (NYSE:POR). Renaissance Technologies has a $150.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $39.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions comprise John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’s AQR Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Cinctive Capital Management allocated the biggest weight to Portland General Electric Company (NYSE:POR), around 0.83% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, setting aside 0.83 percent of its 13F equity portfolio to POR.

Because Portland General Electric Company (NYSE:POR) has faced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedgies who were dropping their full holdings by the end of the first quarter. Interestingly, Sara Nainzadeh’s Centenus Global Management dumped the largest investment of the 750 funds tracked by Insider Monkey, valued at about $9.8 million in stock, and Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital was right behind this move, as the fund dropped about $5.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Portland General Electric Company (NYSE:POR) but similarly valued. We will take a look at FLIR Systems, Inc. (NASDAQ:FLIR), NewMarket Corporation (NYSE:NEU), TFS Financial Corporation (NASDAQ:TFSL), and Globus Medical Inc (NYSE:GMED). This group of stocks’ market valuations resemble POR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FLIR 34 193470 2
NEU 20 143254 -2
TFSL 9 134718 -2
GMED 19 166330 -10
Average 20.5 159443 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $247 million in POR’s case. FLIR Systems, Inc. (NASDAQ:FLIR) is the most popular stock in this table. On the other hand TFS Financial Corporation (NASDAQ:TFSL) is the least popular one with only 9 bullish hedge fund positions. Portland General Electric Company (NYSE:POR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately POR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on POR were disappointed as the stock returned -12% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.